Executive Briefings

Managing SKU Variety and Warehouse Flow-Through in the Automotive Supply Chain
Managing SKU Variety and Warehouse Flow-Through in the Automotive Supply Chain

Innovations in automotive design and manufacturing are creating a fresh set of challenges for aftermarket supply chains. Automakers are being called on to manage an ever-expanding variety of SKUs, as they labor to enhance consumer choice. 

Parts suppliers haven’t kept pace with the demands of original equipment manufacturers (OEMs), says Burton White, vice president of industry supply chains with Chainalytics. Rising complexity has bred inefficiency, to the point where multiple SKU numbers might be describing the same configuration of parts. The resulting inefficiencies are making it difficult for suppliers to provide rapid delivery to auto repair shops, parts retailers and end customers.

OEMs and part suppliers are struggling to satisfy increasingly volatile demand. The solution lies in a combination of better forecasting and a risk-oriented approach to assessing actual buying patterns, says Patrick Smith, general manager of ToolsGroup. Suppliers need to understand the probability of any one forecast being correct, so as to better their chances of having inventory in the right place at the right time.

Consumers want options, and OEMs are responding with a virtually infinite variety of vehicle configurations. To address the resulting complexity, suppliers need to adopt a more scientific approach to demand, says Roddy Martin, manager director of Accenture. The analytics technique known as segmentation can help. It distinguishes SKUs according to their degree of demand predictability. An airbag, for example, is more likely to be required on large numbers of vehicles than a particular entertainment or communications system. Suppliers need to adjust their inventories accordingly.

As automotive supply chains become more global, OEMs find themselves sustaining a delicate balance between lean and agile supply chains. The need for reliable partners who can help them to manage each link with maximum efficiency is sure to grow.

Innovations in automotive design and manufacturing are creating a fresh set of challenges for aftermarket supply chains. Automakers are being called on to manage an ever-expanding variety of SKUs, as they labor to enhance consumer choice. 

Parts suppliers haven’t kept pace with the demands of original equipment manufacturers (OEMs), says Burton White, vice president of industry supply chains with Chainalytics. Rising complexity has bred inefficiency, to the point where multiple SKU numbers might be describing the same configuration of parts. The resulting inefficiencies are making it difficult for suppliers to provide rapid delivery to auto repair shops, parts retailers and end customers.

OEMs and part suppliers are struggling to satisfy increasingly volatile demand. The solution lies in a combination of better forecasting and a risk-oriented approach to assessing actual buying patterns, says Patrick Smith, general manager of ToolsGroup. Suppliers need to understand the probability of any one forecast being correct, so as to better their chances of having inventory in the right place at the right time.

Consumers want options, and OEMs are responding with a virtually infinite variety of vehicle configurations. To address the resulting complexity, suppliers need to adopt a more scientific approach to demand, says Roddy Martin, manager director of Accenture. The analytics technique known as segmentation can help. It distinguishes SKUs according to their degree of demand predictability. An airbag, for example, is more likely to be required on large numbers of vehicles than a particular entertainment or communications system. Suppliers need to adjust their inventories accordingly.

As automotive supply chains become more global, OEMs find themselves sustaining a delicate balance between lean and agile supply chains. The need for reliable partners who can help them to manage each link with maximum efficiency is sure to grow.

Managing SKU Variety and Warehouse Flow-Through in the Automotive Supply Chain

Learn more about the challenges of managing SKU complexity in automotive supply chains by watching this video, which also addresses the critical issues of risk management and quality assurance, and the impact of 3D printing.